In Argentina, there are everywhere traces of distrust and even of economic trauma.
For Jerónimo Ferrer, a formative memory is that of Argentina crushing financial crisis in the late 1990s – when bank accounts were frozen and, almost overnight, people’s savings evaporated.
He is not alone. One engineering student I spoke to keeps all of his savings, in US dollars, at home because he fears the banks will devalue his assets again overnight.
While many Argentines are, by necessity, experts on the state of the economy – from skyrocketing inflation to the current unofficial exchange rate between the peso and the US dollar – Mr. Ferrer went further than the mostly.
Since 2019, he has been running a walking tour called “Our Crazy Local Economy and Bitcoin Tour of Buenos Aires“, where he explains to tourists the level of restrictions Argentines face, such as limits on foreign currency transactions or international installment payment bans. flights.
He also provides an introduction to cryptocurrency, in particular bitcoin, and explains why he thinks it is a valuable alternative to the volatile and highly controlled Argentine peso.
“When you have restrictions, you need tools for freedom,” says Ferrer.
For many crypto enthusiasts around the world, decentralized and digital currency is mostly about ideology or profit. But for many Argentines, it meets more basic needs.
“I trust math and software more than politicians,” says Ferrer. “I think Bitcoin for Argentinians should be a no-brainer.”
Heavy government intervention in the economy has other ways to help cryptocurrency gain a foothold in Argentina. For example, it is relatively inexpensive to operate a energy-intensive bitcoin mining operation, as the cost of electricity is kept relatively low.
Bitcoin mining is the process that creates new Bitcoin. It involves computers solving complex mathematical problems. Solve the problem and you receive Bitcoin. It sounds simple, but involves elaborate computer systems, requiring a lot of electricity to run and cool them.
The Center for Alternative Finance at the University of Cambridge estimates that globally, the electricity used in bitcoin mining be about 137 terawatt hours per year. This is about the same as the annual usage of some countries, such as Norway or Poland.
Generating this electricity will contribute to global carbon dioxide emissions, but it is difficult to estimate how many.
However, in Argentina, these environmental issues are often overshadowed by financial concerns.
For some early adopters of cryptocurrency in Argentina, even a relatively young and unpredictable currency is preferable to the extremely changing peso.
Bitcoin, the most popular cryptocurrency, can also help protect against high inflation because there is a finite amount of money that can be created.
Inflation, which measures changes in the cost of living over time, is a constant concern in Argentina. The year-over-year inflation rate is staggering, more than 50%.
“During the pandemic, people noticed this situation and to protect their money, they chose to look for a limited asset,” says María Mercedes Etchegoyen.
Ms. Etchegoyen is a lawyer specializing in intellectual property, as well as a member of the executive committee of the NGO Bitcoin Argentina. She helped start the Cryptogirls community to capitalize on the increased interest in cryptocurrency during the pandemic.
So far, the government has taken a relaxed attitude towards the cryptocurrency boo. “In Argentina, there are no specific regulations on cryptocurrency,” says Ms. Etchegoyen.
However, the Central Bank has issued warnings about crypto-based scams.
He acknowledged that the level of crypto usage is not yet high, but is growing rapidly and is cause for concern.
Ms Etchegoyen worries about unequal access to cryptocurrencies.
So far, it’s been the preserve of a minority – largely a young, male, tech-savvy and relatively affluent population. It’s the tech workers, not the farmers, who get paid in Bitcoin.
“Today, it’s not a technology that everyone can access,” acknowledges blockchain consultant Lucia Lizardo.
Still, efforts are underway to expand the reach of crypto – in part through financial products that provide a stepping stone between traditional currency and cryptocurrency.
Three Argentinian start-ups now offer debit cards for crypto transactions. One such company, Lemon, was founded in a town in Patagonia where 40% of businesses accept Bitcoin.
Some people in Argentina are also turning to “stablecoins”, which are pegged to the US dollar and are therefore less prone to fluctuations in value.
Of course, crypto won’t provide a one-size-fits-all solution to Argentina’s economic problems. And that brings its own problems of currency speculation, fraud and environmental impact.
Overall, though, “I think it’s like a revolution for young people,” comments Ms Lizardo.
For Mr. Ferrer, the need is clear. “It’s our money, and it’s the only money politicians can’t destroy.”